Don't Miss


Home   >   Market - Finance   >   Finance   >   FCMB and Finbank Merger gets CBN Approval

FCMB and Finbank Merger gets CBN Approval

By on July 29, 2011

The Central Bank of Nigeria (CBN) has approved the merger of First City Monument Bank (FCMB) and Finbank. Both banks had signed a Transaction Implementation Agreement (TIA) a fortnight ago which culminated in concrete merger talks between both institutions.

Finbank company secretary, Nechi Ezeako, who confirmed the approval, said both parties would continue the merger process as required. “The financial advisers are working on it and we are working towards making the CBN deadline. We are very optimistic that we will meet the deadline.”

With this regulatory approval, the merger talks would proceed to process of scheme arrangement which entails the valuation of each company’s worth and what each shares would exchange for, all subject to shareholders’ approval, the CBN, Securities and Exchange Commission, the Nigerian Stock Exchange and the Federal High Court, which will approve a court ordered meeting of shareholders.

Unique institution

A joint release by both institutions recently stated that the combined bank will be a unique financial institution, with proven corporate banking capabilities, strengthened commercial banking business and a robust platform for retail growth. “The merged entity will also benefit from complementary transactional banking platforms and offerings. Furthermore, the combined entity will better leverage capital, optimise synergies and drive shareholder value.”

FCMB chief executive officer, Ladi Balogun told Reuters that he expects the SEC and shareholders’ approval to be obtained within the next 40 days and that the bank would not need to raise fresh funds to finance the deal. “This will enable FCMB to grow its strategy,” he was quoted as saying.

Finbank is one of the eight banks rescued by the Central Bank in 2009 and got an injection of about N50 billion to stay afloat after replacing the sacked management. Since then, the CBN has encouraged the entrance of new core investors in the intervened banks. Under this scenario, FCMB would emerge as the dominant partner.

The CBN last month gave the rescued banks until September to recapitalise or face nationalisation or liquidation. As an incentive, it extended the interbank guarantee to intervened banks that had signed the TIA to December 31.

CBN deputy governor, financial systems stability, Kingsley Moghalu has said that the recapitalisation of the intervened banks is completed in as timely a manner as possible since the institutions still remain in a fragile condition. “It is not in the interest of the nation’s financial system for the recapitalisation process to be open ended, without a deadline, or timeline to work with,” he said.